Coca-Cola to sale Starbucks and Nestle's rival Costa Coffee? Who are potential buyers?

U.S. soft drinks company Coca-Cola is working with investment bank Lazard to review options, including a potential sale, of British coffee chain Costa, a source familiar with the matter told Reuters on Sunday. Coca-Cola has held initial talks with a small number of potential bidders for Costa, including private equity firms, Sky News first reported, citing unidentified sources. Coca-Cola, Costa, and Lazard are yet to make official statements.

Indicative offers are expected in early autumn, but a sale is not definitive, Sky reported.

Coca Cola acquired Costa Coffee in 2018 for over $5 billion, to strengthen its position in the global coffee market, competing with Starbucks and Nestle.

A potential sale of Costa Coffee which operates in 50 countries, would add onto the wave of dealmaking in the packaged food space which has witnessed robust growth as companies seek scale to weather the impact of price inflation and consumers shopping for healthier options.

In an earnings call last month, the Coca-Cola CEO James Quincey hinted at changes to Costa's operations, saying "Our investment in Costa is not where we wanted it to be from an investment hypothesis point of view."

"We're in the mode of reflecting on what we've learnt, thinking about how we might want to find new avenues to grow in the coffee category, while continuing to run the Costa business successfully."

In the United States, food companies are seeking healthier substitutes as they respond to Health Secretary Robert F. Kennedy Jr.'s Make America Healthy Again campaign. In July Coca-Cola had agreed to use real cane sugar in the United States.

FAQs

Q1. Who owns Costa Coffee?
A1. Coca Cola acquired Costa Coffee in 2018 for over $5 billion.

Q2. Which are prominent global coffee chains?
A2. Starbucks, Nestle, Costa Coffee are prominent global coffee chains.